Money Management

Struggling to pay for car insurance? Read on for ways to lower your costs. 

Owning a vehicle is hardly an inexpensive prospect. In fact, it costs an average of $10,728 a year to own a car, according to AAA.

Part of that expense has to do with the cost of auto insurance. The amount you’ll pay for it will hinge on factors like your personal driving record and the type of vehicle you own. But if your auto insurance costs have been rising, you’re in a good company.

A 2023 Policygenius survey found that 43% of insured U.S. drivers say they’re paying more for car insurance now than they were a year ago. If your costs are wreaking havoc on your budget, it pays to do what you can to lower them. Here are some options to look at there.

1. Shop around for a more affordable policy

There’s no reason you have to stay loyal to the same car insurance company year after year if there’s a better offer out there. Shop around with different insurers to see what rates they have to offer. You might manage to lower your costs by signing up for a new policy.

2. Ask your insurer what discounts it has to offer

Auto insurance companies don’t always publicize the discounts they make available to drivers, but that doesn’t mean they don’t exist. Contact your insurance company and ask if doing something like taking a defensive driving course could result in a lower rate.

And also, if you don’t use your car very often, make sure your insurer knows about it. Many people are working from home on a permanent basis these days. If that’s the case, and your car spends most of its time parked in your garage, your insurer may be willing to lower your rate.

3. Increase your deductible

The higher your auto insurance deductible is, the less you might spend on premiums. Raising your deductible means running the risk of having to shell out more money in the event of an accident. But it could be your ticket to lowering your premium costs.

And also, think about it this way — you may not even get into an accident this year. But you know for sure that you’ll need to pay your car insurance premiums.

4. Bundle with your homeowners insurance policy

If you have car insurance with one company and homeowners insurance with a separate company, you may be doing yourself a disservice. Many insurers offer discounts when you sign up for both auto and homeowners insurance, so do some research to see if bundling your policies makes sense.

Auto insurance is one of those expenses you can’t avoid as a vehicle owner. But that doesn’t mean you need to resign yourself to paying more than you were in the past.

If your premium costs have risen to the point where they’re tough to afford, make a point to shop around for a better rate, look into discounts, and see if a homeowners insurance bundle can result in savings. And also, consider raising your auto insurance deductible, even if it means taking on more risk in the event you need to file a claim.

Our best car insurance companies for 2022

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Salaries in sports contracts don’t tell the whole story on how much athletes earn. See how much professional athletes at every level really take home. 

Professional sports are big businesses, and the athletes at the top of their professions make big money. In the NBA, Stephen Curry earns an average of nearly $54 million per year. Reigning NFL MVP Patrick Mahomes averages $45 million per year.

That doesn’t mean they took home that much money, though. They still need to file taxes, like everyone else. Professional athletes also have other expenses that most people don’t need to worry about — things like agent’s fees and jock taxes. And they don’t all earn superstar salaries, either. Most players earn much smaller, but still impressive salaries.

So, what kind of money do professional athletes at the highest levels really make? Here’s the answer.

How much professional athletes really make

To find out how much professional athletes take home, we need to know what gets taken out of their salaries. These are the typical deductions:

Federal income taxes: Federal income tax rates range from 10% to 37% as of 2023. For athletes making millions per year, most of their income will fall into the highest tax bracket.State income taxes: State tax rates range from 0% in states with no income tax to as high as 13.3% in California.Jock taxes: Professional athletes must pay taxes in every state where they play a game.FICA taxes: Employees pay 6.2% for Social Security on up to $160,200 in earnings, as of 2023. They also pay 1.45% on all wages for Medicare.Agent fees: NFL agents charge 1.5% to 3% (the maximum allowed), and NBA agents charge 2% to 4% (the maximum allowed). MLB agents generally charge 3% to 5%, but there is no fixed maximum.

Professional athletes generally take home about 50% to 60% of their reported salaries. The exact amount depends on where they live, the states where they play jock taxes, and how much their agent charges. Taxes and agent fees normally cost 40% to 50% in total.

Now, let’s look at typical salaries, and how much those athletes would take home, in the biggest sports leagues.

How much NFL players make

NFL salaries range from $750,000 (the minimum salary in 2023) to $52 million per year for Lamar Jackson. An NFL player on a minimum contract will take home about $382,000 to $467,000, after taxes and a 3% agent’s fee.

On the high end, Lamar Jackson will likely take home about $28.6 million after taxes. He doesn’t need to pay 3% to an agent, because he negotiated his own contract. While he received plenty of criticism for his decision to represent himself, it ended up saving him as much as $1.56 million per year.

How much NBA players make

NBA salaries range from $1.12 million (the minimum salary in 2023) to $51.92 million, the 2023 salary for Stephen Curry. An NBA player on a minimum contract will take home about $545,000 to $680,000, after taxes and a 3% agent’s fee.

Stephen Curry will likely take home about $23 million after taxes and a 3% agent’s fee. Like other pro athletes in California, Curry ends up paying quite a bit in taxes.

How much MLB players make

MLB salaries range from $720,000 (the minimum salary in 2023) to $43.33 million, the 2023 salary for both Max Scherzer and Justin Verlander. An MLB player on a minimum contract will take home about $362,000 to $442,000, after taxes and a 4% agent’s fee.

Max Scherzer and Justin Verlander will each likely take home about $21.4 million after taxes and a 4% agent’s fee. They both play for the New York Mets, so there shouldn’t be much difference between their tax rates.

Not all professional athletes are big earners

When we think of professional sports, the first thing that comes to mind is usually the largest sports leagues. Players in these leagues earn very high salaries because they’re the best of the best. The NFL, NBA, and MLB also all have unions representing players and ensuring that they’re guaranteed minimum salaries, as well as other benefits.

These only make up a small portion of professional athletes, though. There are smaller leagues where players earn salaries more in line with the average U.S. income. For example, in the XFL, the average player is estimated to earn about $60,000 per season. The NBA G League has a minimum salary of $40,500 per season.

Athletes can earn quite a bit of money. But being a professional athlete doesn’t guarantee a massive salary. And a massive salary alone doesn’t mean a player is set for life — some of the most successful athletes have ended up going bankrupt. Even when someone’s income is much higher than the norm, the fundamentals of personal finance don’t change.

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Gas is one of the usual expenses for many Americans. Learn how to decide if a gas credit card is a good choice or if there’s a better option for you. 

For most Americans, driving is the primary mode of transportation. Over 90% of U.S. households have at least one vehicle, and areas with ample public transportation are the exception, not the norm.

If you’re one of the many people with a car, that means you’re probably at the gas station on a weekly or monthly basis. Americans spent an average of $179 per month on gas in 2021, a total of $2,148 in gas spending that year. You may be wondering what you can do to save on your own gas spending, or at least make the most of it.

Gas credit cards are a popular choice. These are rewards cards that earn bonus cash back or points at gas stations. While getting one may seem like an easy call, there could be better options available.

How to decide if you should get a gas credit card

Before you decide to get a gas credit card, check how much you actually spend on gas every month. Compare that to the amount you spend on any other large expenses you have, such as groceries.

Tip: If you’re having trouble keeping track of your expenses, try using budgeting apps. These help you track spending and break it down by category.

Some people assume that because gas is one of their regular expenses, they should get a gas credit card. That’s not always correct. Gas can be a big expense, but it’s usually not the biggest expense, unless you have a long commute.

For example, Americans spend more on groceries ($438 per month on average) and dining ($253 per month), according to household spending data. If you spend more in either of those areas, you could earn more back with one of these types of credit cards:

Grocery credit cardsDining and restaurant credit cards

Let’s say your spending is right in line with those averages. You could get a gas credit card that earns 3% cash back at gas stations. At $179 in monthly gas spending, you’d earn $5.37 per month and $64.44 per year in cash back.

Now, let’s say you decide on a grocery credit card instead. It earns 3% back at grocery stores. At $438 in monthly grocery spending, you’d earn $13.14 per month and $157.68 per year in cash back. That’s more than twice as much cash back.

If you spend more on gas than you do on food and your other expenses, a gas credit card is a good choice. If not, there’s likely a better credit card out there.

Other ways to earn more back on your gas spending

Even if gas isn’t your biggest expense, it may be in the top five or so. And it could still be beneficial to look for ways to earn more rewards when you fill up. Here are the two easiest ways to do this:

Get a credit card with bonus rewards in multiple spend categories. Many of the best rewards credit cards earn bonuses in several areas. For example, there are gas and grocery credit cards that earn extra in both those categories. Cards like these allow you to get the best of both worlds.Get multiple rewards credit cards. Another option is to get more than one credit card. You can then have your gas credit card, your dining credit card, and so on, earning bonuses across more spend categories. You can also take advantage of benefits from more top credit cards this way.

The right option will depend on whether you’re open to having multiple cards, or if you’d prefer a one-card wallet. After you decide, you can start looking for the card (or cards) that will help you maximize rewards.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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People often wonder what lower, middle, and upper class really mean. Get a better understanding of these terms with the average net worth of each class. 

Lower class, middle class, and upper class are all widely used, but rarely defined terms. For some people, lower class means living in poverty, upper class means a life of luxury, and middle class is everyone else.

Thanks to reports by the U.S. Census Bureau, we can get a much more accurate idea of what these terms mean financially. There are two reports that are useful here:

Income in the United States: 2021 provides a breakdown of household income by quintile, so we can see the bottom 20% of incomes, the next 20%, and so on, up to the top 20%.The Wealth of Households: 2021 provides the median wealth of households at each income quintile.

If you’re interested in how much the typical household in each group is worth, how much money they make, and where your own personal finances land, you’ll find the answer below.

Average net worth for the lower class

Median net worth: $12,000Income: $28,007 or less

The bottom 20% of earners make up the lower class. Household incomes top out at $28,007, which is well below the average U.S. income.

This is a good time to clarify that these terms are only based on someone’s current net worth and income. Many young adults and students will be in the lower class because they haven’t had time to build their careers and net worth yet.

Average net worth for the middle class

The middle class is a broad group of people, so it’s separated into three categories: Lower middle class, middle class, and upper middle class. Here’s the financial data for each one.

Lower middle class

Median net worth: $61,260Income: $28,008 to $55,000

The lower middle class consists of those in the 20th to 40th percentile of household income. That makes a sizable difference, as this group has a median net worth more than five times greater than that of the lower class.

Middle class

Median net worth: $145,200Income: $55,001 to $89,744

The middle class consists of those in the 40th to 60th percentile of household income. Their median net worth is nearly two and a half times that of the lower middle class.

Upper middle class

Median net worth: $269,100Income: $89,745 to $149,131

The upper middle class consists of those in the 60th to 80th percentile of household income. The median net worth is nearly double that of the middle class.

Average net worth for the upper class

Median net worth: $805,400Income: $149,132 or more

The top 20% of earners are the upper class. There’s a significant difference in wealth for this group. Their median net worth is about three times that of the upper middle class and about 67 times more than that of the lower class.

Does class matter?

It’s interesting to see what kind of net worth and income correspond to each class. Keep in mind though that these are just terms, and where your own numbers fall isn’t really what matters.

Net worth matters. It’s one of the better ways to measure how you’re doing financially. Over the course of your career, if your net worth is increasing, it’s a sign you’re managing your money well. Income also matters. You don’t need to make a huge salary, but a high income certainly has its benefits.

So, for your own financial health, it’s a good idea to get into these financial habits:

Spend less than you earn.Save and invest money every month.Contribute to retirement accounts.Look for opportunities to increase your income.

These habits will all grow your net worth and potentially your income, meaning they could help you move up in “class.” But being part of the middle class, the upper middle, or the upper class isn’t the point. What matters is managing your own finances well, so you’re comfortable and happy with where you’re at.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Many Americans are interested in getting more credit cards. Check out the reasons why and see how you can decide if another credit card is a good idea. 

What’s the magic number when it comes to credit cards? That largely depends on the person. A recent credit card study by The Motley Fool Ascent found that most Americans have one or two cards. But not everyone is completely satisfied with how many they have.

Nearly a quarter (23%) of respondents said they think they should have more credit cards. This was more common with younger generations, as 35% of Generation Z and 29% of millennials wanted more cards.

If you’re going to get a new credit card, it’s important to have a good reason why. However, some of the reasons people gave for wanting more cards could backfire on them. Here’s why 23% of Americans want more credit cards, and if you should get a new card for these reasons.

45% want to improve their credit score

The most common reason people want more credit cards is raising that all-important credit score. Does having more cards help your score? The answer is a little complicated.

The number of credit cards you have isn’t a part of your credit score. But there are ways that new cards can impact your score, with the most significant being your credit utilization ratio.

Your credit utilization is the portion of your credit that you’re using. It accounts for 30% of your FICO® Score (the type of score most widely used by lenders). If you have one card with a $5,000 limit and a $2,500 balance, then your credit utilization is 50%. That’s on the high side. It’s recommended that you keep your credit utilization below 30%, so using 50% of your credit limit will typically hurt your credit score.

If you were to open another card with a $5,000 credit limit, you’d have $10,000 in credit. The same $2,500 balance now only results in a credit utilization of 25%. Your credit score would most likely increase if you brought it down this way.

There are also a couple of ways getting a new credit card can have a small negative impact on your credit:

It reduces your average credit account age. This isn’t a major scoring criteria — it only accounts for 15% of your FICO® Score.New credit applications can lower your credit score. Once again, these aren’t a major scoring criteria. They account for just 10% of your FICO® Score, and a single application takes less than five points off most consumers’ scores.

30% want to be able to spend more and have more credit

Some people want to boost their buying power. This is where credit cards can become dangerous.

Now, there’s nothing wrong with wanting more credit to cover everyday expenses. If your only credit card has a $500 or $1,000 limit, then getting another card makes sense. You don’t want to be constantly worrying about maxing out your credit card and not being able to use it.

With another card, you’ll have some more breathing room. It will also help you keep your credit utilization lower. As we went over above, that’s good for your credit score. Keep in mind that if you have a card with a low credit limit, you can also ask for a credit limit increase instead of applying for a whole new card.

Where people get into trouble with credit cards is spending more than they can afford. No matter how much you can spend, the best approach is to pay your full credit card bill every month. That means only charging what you can afford to pay back.

25% want to better maximize rewards

There’s also a sizable portion of consumers who want more cards to earn more rewards. This is a great reason, because there are a few ways having more cards helps you with that:

You can earn more welcome offers. Many credit cards have lucrative welcome offers where you can earn bonus points or cash back. These are often the fastest way to earn rewards.You can earn bonus rewards in more spending categories. Many rewards credit cards earn bonuses in certain areas, such as groceries, gas, or dining. By getting more rewards cards, you can earn bonus rewards in more areas.

You still need to be careful not to overspend. If you can’t pay off your card’s full balance every month, you’ll be charged credit card interest. Interest charges will usually cost you much more than you make in rewards. If you consistently pay off your credit cards, then having multiple rewards cards can be beneficial.

There’s nothing wrong with getting more credit cards if you think it will benefit you financially. Regardless of how many credit cards you have, the key is how you use them.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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